The Inexorable Recoveries of Unemployment

The Inexorable Recoveries of Unemployment 

Robert E Hall and Marianna Kudlyak, Journal of Monetary Economics, 2022, Vol. 131: 15-25.  

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Abstract: Unemployment recoveries in the US have been inexorable. In the aftermath of a recession, unless another crisis intervenes, unemployment continues to glide down. Between 1948 and 2019, the annual reduction in the unemployment rate during cyclical recoveries was distributed around 0.1 log points per year. The economy seems to have an irresistible force toward restoring full employment. Occasionally, unemployment rises rapidly during an economic crisis, while most of the time, unemployment declines slowly and smoothly at a near-constant proportional rate. Similar properties hold for other measures of the US unemployment rate and for unemployment in emerging and advanced countries.

Slides, presentation at Markus Brunnermeier Academy, Oct 2020

Paper in Working Paper series: FRB San Francisco, NBER, Hoover Institution, CEPR, IZA